In the recent case MSI (Holdings) Pty Ltd v Mainstreet International Group Ltd, the Queensland Supreme Court confirmed that receivers of a company in liquidation can commence legal proceedings in the name of the company without leave of the court, when those proceedings relate to the recovery of secured property.
Central Coast was a secured creditor of MSI. MSI had lent funds to Mainstreet. The MSI loan to Mainstreet was subject to Central Coast's security interest. MSI defaulted on its obligations to Central Coast, which appointed receivers. MSI was then put into liquidation by a court order. The MSI receivers sought and obtained default judgment against Mainstreet for the debt owed to MSI. However, Mainstreet successfully applied to have the default judgment set aside on the basis that MSI did not have the permission of the court to commence proceedings as required when a company is in liquidation by section 471B of the Corporations Act.
MSI appealed the decision to set aside the default judgment on the basis that the restriction in section 471B does not apply to a secured creditor realising secured property. Although it was MSI, and not the secured party, Central Coast, that commenced the recovery proceedings, MSI argued that the exception for secured creditors applied because the receivers of MSI had the same rights under the security document as Central Coast to bring proceedings for recovery of secured property in the name of the company. The Court accepted MSI's argument and characterised the steps taken by MSI to recover the loan as the realisation of Central Coast's security interest, albeit by the receivers acting through MSI.
See court decision here.